• Tuesday, June 25, 2024
businessday logo

BusinessDay

Nigeria can save $21bn from local oil refining, subsidy removal – IPMAN

Data exposes FG’s insincere denial of ‘secret’ petrol subsidy

The Independent Petroleum Marketers Association of Nigeria (IPMAN) has said that Nigeria will save up to $21 billion from local refining and the removal of the controversial petrol subsidy.

Mike Osatuyi, national operations controller, IPMAN said Nigeria is going to be producing more than it needs in the country when the Dangote refinery and other state refineries come on stream, during an interview on Arise TV.

According to him, about N40 per litre will be removed from the current cost of petrol if the Dangote Refinery comes on stream. These savings will come from the elimination of freight and lithering charges.

Petrol used in Nigeria is imported from refiners in Europe incurring freight charges. The Nigerian ports are not deep enough for most of these ships to berth, so a further cost is incurred in transferring the cargo to smaller vessels. This is known as lithering charges and often costs about $50,000 for each trip.

“Oil marketers will head to Lekki and then to Apapa to discharge. All the shipping charges will be minimal. It is going to take N40 off the cost of petrol, based on the template, which is billions of dollars in savings. There is going to be less pressure on the naira,” he said.

Read also: Again, tribunal adjourns APM’s petition to Friday over supreme court judgement

“We are going to save up $21 billion in foreign exchange if we are producing in Nigeria. About $10 billion will be saved in terms of selling abroad and the subsidy removal will save another $11 billion for the country.”

President Bola Tinubu on Monday during his inauguration announced that “subsidy is gone” sending the market into a tailspin as those who had the products quickly shut their pumps and long queues emerged across the nation.

Osatuyi added that the value of the naira will be stronger and there is going to be less pressure on the naira. According to him, the Gross Domestic Product of the country will go up and there will be employment. “The issue of petrol scarcity and queues will go forever,” he said.

Osatuyi further said that they will be no monopoly in allocating the forex to import petrol. It will be an open field for oil marketers and will competition and fairness will benefit consumers.

He added that the volume of petrol consumption will crash to about 40 million litres daily on the back of the subsidy removal.